VideoNuze Posts

Yesterday's news that World Championship Sports Network (WCSN) has sold a majority interest to Leo Hindery's InterMedia Partners shows that the company's success in aggregating the Long Tail of sports is succeeding. In addition, it shows there are slivers of success in paid subscription models. To be sure, WSCN also sells plenty of ads, but the core of the company's model is its $4.95/mo or $49.95/year subscriptions.

Hindery, who in his past life headed former #1 cable operator TCI, knows from TCI's old Liberty Media affiliate, as much as anyone about creating programming value, and this move should certainly be read as a major endorsement of WCSN's strategy. The company has come a long way quickly, I recall speaking to CEO Claude Ruibal about 18 months ago when he was first fleshing out his distribution strategy. Kudos to him and his team for doing deals with many of the majors (MSN, AOL, Yahoo, FoxSports, ESPN.com, etc.) and no doubt driving dramatic traffic gains.

For those not familiar with WCSN, their model has focused on aggregating exclusive Internet rights from key Olympics sports associations, whose sports are generally not well-covered on broadcast or cable TV.

WCSN has been remarkably successful in aggregating these rights. The site lists at least 20 association partners and says "WCSN’s sports coverage includes over 200 live annual events, offering more 2,000 hours of annual original event programming and more than 10,000 hours of archival programming..." One can only imagine the frequent flyer miles that have been racked up by WCSN executives getting these deals done.

A key lesson to WCSN's subscription success is the incredible allure of sports programming. No matter how niche, there seems to always an audience of rabid fans. And their willingness to pay for coverage is insatiable. Now it looks like WCSN is going to ramp up its ad sales as well. In doing the spade work to aggregate this long list broadband rights with clear monetization opportunities, WCSN has created substantial value. No doubt as the business continues to grow it will be an attractive acquisition candidate. If I had to bet, I'd expect an exit to ESPN, the sporting world's 800 pound gorilla, will be in the offing down the road.

MGM is the latest studio to reach out to fans to help promote one of its films, the upcoming "Lions for Lambs". In a deal with Google/YouTube, the studio is sponsoring a contest in which users can submit a 90 second video on a topic they're passionate about. Entries are being accepted until Oct. 17th and the winner, who will have $25,000 donated to a charity of his/her choice, will be selected on Nov 9th.

This promotion follows the mashup competition Metacafe and Universal conducted this past summer around the studio's "Bourne Ultimatum" release. At the time, I noted that broadband is introducing a whole new element into the film marketing equation, opening up huge opportunities for creativity and fan involvement. As the tools continue to improve I expect we're going to see a lot more of these "UGC-assisted" campaigns.

Studios (and others) are going to continue to experiment with just how much fans are willing to be a part of the marketing machinery. Of course nobody knows, but my guess is that if the incentives are right, the promotions are fun and the stars are compelling, it's going to be a pretty rich vein for film marketers to tap into.

Tomorrow I'll be at Akamai's annual analyst day (disclaimer: Akamai is a VideoNuze sponsor). The morning speaker line-up includes Paul Sagan, President and CEO, Tom Leighton, Chief Scientist and Co-Founder and Mike Afergan, CTO. I attended last year and found it to be an extremely informative day, especially since Akamai is the leading CDN and has been very focused on the media and entertainment space.

I'll be listening for information on 3 specific areas:

• Update on pricing pressure and what this means for customers?
• How Red Swoosh P2P integration is coming along and are any customers using it yet?
• Any insight on service providers' (cable operators and telcos) motivation to build out their own private CDNs with gear like Cisco's CDS?

I'll try to provide an update before hopping a plane to Dallas to speak about broadband video trends at a large broadcasters' executive offsite.

CM is offering Syndicaster free for 2 main reasons, first because they want to incent broadcasters to use it widely, in turn helping CM's Clip Syndicate unit build a gigantic library of clips to syndicate around the web (as Sean says "to lubricate the digital broadcast syndication market"), and second, because they can. How? Because Critical Mention already takes video feeds from 240+ broadcasters covering 85%+ of the U.S. population, digitizing them for its CriticalTV search and monitoring system. I'm assuming that beyond development, there's little incremental cost in running Syndicaster.

Sound a little confusing? To simplify, there's a web of product offerings, all powered from the same underlying infrastructure. Actually, it's a very cool example of the scale opportunities in digital media. Once you've collected the data (in this case video, which is also transcribed into text), there are multiple products, markets and customers to serve. And it also shows that traditional hardware/software solutions continue to be at risk in the Internet age.

Syndicaster's now being offered to 450 initial broadcasters. Soon, others can sign up too. Sean and Sharon also gave me a sneak peek into some other upcoming stuff. All very interesting. Keep an eye out for more soon.

Herb Scannell, who was on my CTAM panel yesterday pointed me to "Internet People" part of his firm's Channel Federator "Meth Minute 39" series (side note, it's actually quite clunky to try to adapt traditional TV lingo to describe broadband video properties...). If you haven't seen it, I highly recommend. It's like a stroll down the Internet's memory lane. All the famous and infamous characters over the years.

What's impressive about Internet People how it shows how fluid creative development and partnerships around broadband video (especially animation) is. Herb said that his partner at NNN was exposed to Dan Meth's "Hebrew Crunk" animation and that spurred them to work together. They had a similar philosophy and were able to figure out a relationship quickly. Also, I asked Herb how long he estimated it took to create Internet People..he thought less than 100 hours probably. And NNN coordinated to premier Internet People on YouTube, helping drive 800K views in the first week.

Pretty impressive, see for yourself.

Today I moderated a spirited discussion panel at CTAM NY’s annual Blue Ribbon Breakfast at Gotham Hall in NYC. The title was "Over the Top TV....Can Broadband Video Be Cable's Newest Opportunity?" We had an amazing group of panelists (click here to see list and listen to podcast) and with 450+ attendees a packed house as well.

A key question we dug into was whether and to what extent cable’s traditional (and highly successful) paid subscription model will be impaired by the rise of broadband video usage. Try as I did to see if any of the panelists believe that it will, none would admit to it. The reasons given included, "some form of a paid model will always exist but will never succumb entirely to a free, ad-supported model" to "cable networks won’t push broadband video distribution of their programs so hard as to upset the current model of receiving affiliate fees from cable operators", to "the low probability that inexpensive PC-to-TV bridge devices will proliferate any time soon" to "viewers have shown that they want a selection of channels to browse."

While I think each of these answers is quite legitimate, my point of view is that we are in the early days of an fundamental transformation in the video (and indeed the media more generally) business that will eventually (though of course who knows when and to what eventual degree) see most, if not all programming get unbundled into a fully on-demand paradigm.

I believe the ultimate answer to how cannibalistic broadband is toward cable ultimately turns on whether consumers believe it’s a "zero sum" game, meaning they choose between EITHER accessing programs via a VOD or DVR offering only available if they’ve bought into a monthly multi-channel video subscription (that’s to say the way the world works today) OR if they opt out of that subscription offering and INSTEAD choose to buy these programs a la carte, or receive them free, courtesy of a highly targeted ad model. The opt out option would of course be available through open broadband video distribution.

All trends point to the latter ultimately prevailing. While cable operators are well-positioned to shift their models to exploit this behavior if they act aggressively, they are also vulnerable to it if they don’t. The most important driver of the "opt out" scenario is that for an increasingly larger portion of our society, their behavior and expectations are formed by the Internet. And the ‘net is a completely personalizable and on demand medium. Especially for most online media, it is also mainly free, or paid on a fully a la carte basis (e.g. iTunes). Users’ expectations are through the roof and only getting higher. As broadband proliferates they will bring these same expectations to their decision-making.

Is it really realistic to believe that in 5 years when today’s MySpace/Facebook/YouTube/iTunes crazed 16 year old kid goes to set up his/her first apartment, s/he is going to embrace the notion of subscribing to a hundred channel package just so s/he can watch a handful of programs on demand? And of course, the ‘net’s behavior change isn’t confined to kids, it’s pervasive across all age groups.

Cable operators have an outstanding opportunity to capitalize on these macro behavioral trends. But doing so will require cable operators to make a significant and risky departure from their traditional subscription-based business models. It’s a classic incumbent’s dilemma. It will be interesting to see if they can do so.